Private Covenants & RLUIPA
In a nationwide case of first impression, an attempt to enforce a private residential use restriction has been dismissed on RLUIPA grounds by a Texas trial court.
Schneider v. Gotthelf, No. 429-04998-2013 (429th Dist. Ct., Collin County, Tex.) involves a residential development in which all parcels are subject to a uniform declaration of restrictions. Among those restrictions is one that restricts development on each residential lot to a “single family private dwelling.” With the owner’s permission, a religious group began using an unoccupied home for weekly services. A neighboring homeowner brought suit to enforce the restriction. The community’s homeowner association (HOA) later intervened as an additional plaintiff.
The religious group (and the non-resident owners of the lot) moved for summary judgment. Without elaboration, the court concluded the Defendants’ motion “should be granted as a matter of law under both (1) the Texas Religious Freedom Restoration Act (“TRFRA”), and (2) the federal Religious Land Use and Institutionalized Persons Act (“RLUIPA”)” Order Granting Defendants’ Motion for Summary Judgment, Feb. 12, 2015.
In their motion papers, the Defendants contended that because Texas statutes “authorize” “the creation and enforcement” of restrictive covenants, any private pursuit of enforcement is an “exercise of governmental authority.” In addition, the Defendants characterized the HOA as a “quasi-governmental entity” subject to the same limitations imposed by TRFRA on a “government agency.” (TRFRA defines “government agency” as the state of Texas, any of its political subdivisions, or an “agency of this state … including a department, bureau, board, commission, office, agency, council, or public institution of higher education.”) Finally, the Defendants claim judicial enforcement of the restrictive covenant is itself state action prohibited by TRFRA. The RLUIPA claims are buttressed with substantially the same arguments as the state claims. The relevant excerpts from the 365-page motion are available here.
The pro se homeowner Plaintiff had moved for summary judgment on the ground that neither the TRFRA nor RLUIPA prohibited activities of a purely private individual. The Order did not address that argument. [Constructive Notice Newsletter has not yet been able to review the motion papers submitted by the HOA].
RLUIPA disputes typically spring from recent regulatory action by a municipal entity. Apart from the facial applicability of TRFRA and RLUIPA, the Schneider case raises the tantalizing question of retroactive application of these statutes. The restrictive covenant at issue was recorded in 1979, more than 20 years before TRFRA or RLUIPA were enacted. There is no dispute the Defendant owners in Schneider took title with constructive, if not actual, notice of the recorded declaration. Hence, to the extent the declaration is a contract mutually binding all owners within the community, the constitutionality of applying TRFRA is called into question under the Contracts Clause. Similarly, to the extent the restrictions constitute property rights, Takings Clause liability may attach to TRFRA’s impairment of those rights.